Phantasmix

Phantasmix November 20th, 2008

Reprinted with permission. Full commentary at Beat the Dart (right on the home page, scroll down)

The Standard & Poor’s 500 index down 6.7 percent to the 752 level, below the closing low of 776.76 logged on October 9, 2002. Dartline, using the Subjective Probability Model (SPM), claimed that the index support would be at 755. However, when the index fell below 755, it established a major technical down trend to 491, last held on January 5, 1995 (500.71).

Indeed, the index can drop 35% and happen within 150-days. … We must consider this consequence based on the historical prediction that SPM correctly made. (Check our achives for the proof.)

“Unrelenting gloom has taken over the markets,” said Dana Johnson, chief economist at Comerica Inc. “The economic news, the concerns about some major financial institutions, the concerns about the auto sector, earnings reports, everything is coming out in a way that is just provoking a massive selling in the stock market. Back in October we were looking at a potential catastrophic meltdown of the credit markets, and that didn’t happen,” he said. “But that doesn’t mean tremendous damage hasn’t been done to the economy.” SPM predicted that event in May 2008.

Bond prices showed stunning advances as investors clamored for the safety of government debt. The yield on the benchmark 10-year Treasury note fell to 3.14 percent from 3.32 percent late Wednesday. Bond yields move opposite their price. The yield on the three-month Treasury bill, considered one of the safest assets around, fell to 0.03 percent from 0.06 percent late Wednesday.

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Phantasmix November 18th, 2008

Reprinted with permission. Full commentary at Beat the Dart (right on the home page, scroll down)

The Standard & Poor’s 500 index rose 8.37, or 0.98 percent, to 859.12, after coming off the 2003 low of 818.69, as the market continues to search for a near-term bottom while again retesting the lows. With a resistance test of 823.47, a near-term decline to 755 is likely.

Remain defensive with a downside bias and limited timeframe to any new commitments. The market was down four of the past five sessions… Many retail investors remained on the sidelines as big institutional traders like hedge funds keep major stock indexes vacillating.

The Labor Department reported that wholesale prices plunged a record amount in October, a drop that could indicate a rising threat of deflation. A condition not friendly to stock investor values.

The uncertainty on Wall Street has kept Treasury bonds in high demand. Longer-term Treasurys also moved higher, with the yield on the benchmark 10-year note falling to 3.53 percent from 3.66 percent. The three-month T-bill is considered the safest assets. Yields that low suggest that investors are willing to earn virtually nothing on their investments as long as their principal is preserved.

The dollar fell against most other major currencies. Gold prices also fell. Light, sweet crude fell $2.09 to settle at $54.95 on the New York Mercantile Exchange, the lowest since January 2007.

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Phantasmix November 13th, 2008

Reprinted with permission. Full commentary at Beat the Dart (right on the home page, scroll down)

The Standard & Poor’s 500 index rose 58.99, or 6.92 percent, to 911.29, after dropping to 818.69 — below its previous intraday low of 839.80 set October 10th. Reset resistance at 930.99 and support at 839.80. A breakdown below 823.47 would trigger a decline to 755.

The 755 value represents twenty times forward earning of the underlying stocks in the index. …. This indicator most watched by traders recovered from multiyear trading lows, buyers jumped in and caused a panic to get in at all cost. Without sellers, the market makers and specialist had a field day by marking up stocks while widening the spreads to suck every dime from the buyers. …

Apparently, herd mentality rules and instantly erased the deepening economic crisis, especially when the Labor Department said the number of newly laid-off individuals seeking unemployment benefits jumped last week to the highest level since right after the Sept. 11, 2001 terrorist attacks. There was also more evidence of a severe pullback in consumer spending, and financial exposure from credit card delinquencies. Future credit card defaults will make the mortgage crisis pale by comparison. Hello, is any one listening? … With Wal-Mart Stores Inc.(WMT) trimming expectations for full-year earnings and Intel Corporation (INTC) cut more than $1 billion from its sales forecast are not signs that the purported recession is over. …

Now for the extra noise: Talking heads with hidden agendas said investors were positioning themselves ahead of a meeting of Group of 20 leaders in Washington.

Fixing the troubled global financial system will not happen until the United States reduces its massive balance of payment deficit which is troublesome to the G-20 that includes Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. United States has papered the world with its currency, materially inflated values that caused unprecedented dislocation. …

Interesting bit of noise from Jack A. Ablin, chief investment officer at Harris Private Bank, who said “some anticipation that we’ll hear some good news from that meeting. Thursday’s rally was part hopeful, part technical, but certainly welcome.” Was this the same Ablin who reported last November that the “U.S. economy remains resilient and the problems with the real estate sector would not have a material affect on growth”? So much from a charter member of the Flying Pink Elephant Gang. …

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